Alfa Laval India Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1115/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2024 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B; RAVI PRAKASH JAIN
• Keywords: Depreciation; Business expenditure; Earning of tax free income; Revenue expenditure; Capital expenditure
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1115/PN/2014 '% % / ASSESSMENT YEAR : 2007-08 ALFA LAVAL INDIA LIMITED, BOMBAY PUNE ROAD, DAPODI, PUNE 411012 PAN NO.AAACA5899A . / APPELLANT V/S DCIT, CIRCLE-8, PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI RAVI PRAKASH JAIN & B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 14-03-2014 OF THE CIT(A)-V, PUNE RELATING TO ASSESSMENT YEAR 2007-08. 2. IN GROUNDS OF APPEAL NO.1.1 TO 1.3 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN SUSTAINING DISALLOWANCE OF RS.4,88,525/- OUT OF THE TOTAL DISALLOWANCE OF RS.15,07,400/- MADE BY THE AO U/S.14A OF THE I.T. ACT. / DATE OF HEARING :06.04.2016 / DATE OF PRONOUNCEMENT: 07.04.2016 2 ITA NO.1115/PN/2014 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF FOOD PROCESSING MACHINERY, PLATE TYPE HEAT EXCHANGERS, VEGETABLE OIL PLANTS ETC. IT FILED ITS RETURN OF INCOME ON 30-10-2007 DECLARING TOTAL INCO ME OF RS.107,09,76,441/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE AO NOTED THAT THE ASSESSEE COMPANY HAS SHOWN DIV IDEND AND TAX FREE INTEREST OF RS.1,95,45,977/- FROM MUTUAL FUND UNITS AND ALSO FROM OTHER COMPANIES WHICH WAS CLAIMED AS EXEMPT. T HE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PROPORTIONATE EXPENDITURE RELATING TO INCOME NOT FORMING PART OF TOTAL INCOME SHOULD N OT BE DISALLOWED. IT WAS SUBMITTED BY THE ASSESSEE THAT INVEST MENTS WERE MADE OUT OF FUNDS OF THE COMPANY AND NO EXPENSES CAN BE SAID TO BE DIRECTLY RELATED TO SUCH INCOME. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE A ND DISALLOWED AN AMOUNT OF RS.15,07,400/- BEING 1/2% AT THE AVERAGE VALUE OF INVESTMENT ON ESTIMATE BASIS BEING EXPEN DITURE INCURRED FOR EARNING SUCH INCOME. 4. IN APPEAL THE LD.CIT(A) RESTRICTED SUCH DISALLOWANCE TO RS.4,88,525/- BY OBSERVING AS UNDER : 6. THE SUBMISSIONS MADE IN THIS REGARD HAS BEEN CONSIDERE D. THE CONTENTION OF THE APPELLANT THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING TAX FREE INCOME IS NOT CORRECT. THE SHARES ARE MAINTAINED IN DEMAT A/C FOR WHICH CHARGES ARE PAID. IN SUCH A BIG ORGANIZATION A STAFF IS GENERALLY DEPLOYED TO LOOK AF TER THE INVESTMENT PORTFOLIO OF THE COMPANY TO WHOM SALARY AND OTHER BE NEFITS ARE PAID. EVEN IF IT IS ASSUMED THAT NO FULL TIME STAFF IS KEPT FO R THIS PURPOSE. COST OF STAFF ON WORK HOUR BASIS CANNOT BE RULED OUT. IN THIS CASE, IT IS SEEN THAT TOTAL TAX FREE INCOME HAS BEEN SHOWN AT RS.1, 95,40,977/-. IT IS SEEN THAT HONBLE PUNE TRIBUNAL HAS RESTRICTED TH E DISALLOWANCE U/S.14A OF INCOME-TAX ACT IN THE CASE OF FINOLEX INDU STRIES LTD., FOR A.Y. 2000-01 IN ITA NO.1365/PN/2011 DATED 29-08-20 13 AT 2.5% OF EXEMPT INCOME. ACCORDINGLY, FOLLOWING THE ABOVE OR DER, DISALLOWANCE U/S.14A OF INCOME-TAX ACT IS RESTRICTED TO 2.5% OF RS.1,95,40,977/- WHICH COMES TO RS.4,88,525/-. THUS, T HE APPELLANT GETS RELIEF OF RS.10,18,875/- (15,07,400 4,88,525) WHILE ADDITION OF RS.4,88,525/- IS SUSTAINED. THUS, THE GROUND IS PARTLY A LLOWED. 3 ITA NO.1115/PN/2014 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASS ESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE TRIBUNAL AFTER CONSIDERING THE FACT THAT ASSESSEE HAD CLA IMED THE EXEMPT DIVIDEND INCOME OF RS.1,75,39,913/- HAS RESTRICTED T HE DISALLOWANCE TO RS.2 LAKHS. HE ACCORDINGLY SUBMITTED THAT IN VIEW OF THE ORDER OF THE TRIBUNAL THE DISALLOWANCE MAY BE RESTR ICTED TO RS.2 LAKHS. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND SUBMITTED THAT THE LD.CIT(A) HAS PASSED A REASONABLE OR DER RESTRICTING THE DISALLOWANCE TO RS.4,88,525/- AS AGAINST RS.15,07,400/- BY THE AO. THEREFORE, THE ORDER OF THE CIT (A) BE UPHELD. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2006-07. THE TRIBUNAL VIDE ITA NO.1457/PN/2010 ORDE R DATED 21-03-2016 HAS RESTRICTED SUCH DISALLOWANCE TO RS .2 LAKHS BY OBSERVING AS UNDER : 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD EARNED DIV IDEND INCOME OF RS.1.75 CRORES, WHICH WAS EXEMPT FROM TAX IN THE HANDS OF ASSESSEE. IN VIEW OF THE PROVISIONS OF SECTION 14A OF THE ACT, THE ASSESSING OFFICER AFTER DISCUSSION WITH THE LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE HAD DISALLOWED RS.3 LAKHS AS BEING EXPENDITURE RELATABLE TO EARNING OF THE SAID DIVIDEN D INCOME. THE ASSESSEE IS IN APPEAL AGAINST THE SAID DISALLOWANCE AND PO INTED OUT THAT IN ASSESSMENT YEAR 2005-06, THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2300/PN/2012 AND ITA NO.2442/PN/2012, VID E ORDER DATED 18.03.2015 HAD DISALLOWED SUM OF RS.75,000/- AS A GAINST THE DISALLOWANCE MADE BY ASSESSING OFFICER AT RS.20,41,929/- BEING 10% OF TOTAL EXEMPT INCOME. THE DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, ACCORDINGLY, HA S INCREASED SUBSTANTIALLY AND IN VIEW THEREOF, WE HOLD THAT DISALL OWANCE OF RS.2 4 ITA NO.1115/PN/2014 LAKHS BEING COST OF EXPENSES ATTRIBUTABLE TO EARNING OF DIVIDEND INCOME SHOULD BE DISALLOWED IN THE HANDS OF ASSESSEE. ACCO RDINGLY, THOUGH, IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2005 -06, DISALLOWANCE OF RS.75,000/- WAS MADE BUT LOOKING AT TH E INCREASE IN DIVIDEND INCOME EARNED BY THE ASSESSEE, WHICH MERITS THE DISALLOWANCE MADE OF RS.2 LAKHS IS MERITED. IT MAY ALSO BE POINTED OUT THAT DISALLOWANCE OF RS.2.50 LAKHS UNDER SECTION 14 A OF THE ACT HAS BEEN MADE IN ASSESSMENT YEAR 2008-09 AGAINST DIVIDEN D INCOME OF RS.1.24 CRORES BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.85/PN/2013 VIDE ORDER DATED 30.08.2013. THE GROU ND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. 9. SINCE THE TRIBUNAL HAS RESTRICTED SUCH DISALLOWANCE TO RS.2 LAKHS ON EXEMPT INCOME OF RS.1.75 CRORES AND SINCE THE AS SESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS RECEIVED TAX FR EE INCOME OF RS.1.95 CRORES, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, DISALLOWANCE OF RS.2.5 LAKHS ON ESTIMATE B ASIS IN OUR OPINION WILL MEET THE ENDS OF JUSTICE. WE HOLD AND D IRECT ACCORDINGLY. GROUNDS OF APPEAL NO.1.1 TO 1.3 BY THE ASSES SEE ARE ACCORDINGLY PARTLY ALLOWED. 10. IN GROUNDS OF APPEAL NO. 2.1 TO 2.4 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWAN CE OF RS.3,52,629/- BEING CONTRIBUTION TO WORKERS MEDICAL RELIE F FUND U/S.40A(9) OF THE I.T. ACT. 11. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HA S CLAIMED AN AMOUNT OF RS.3,52,629/- BEING CONTRIBUTION TO WORKERS MEDICAL RELIEF FUND. ON BEING CONFRONTED BY THE AO, IT WAS SUBMITTED BY THE ASSESSEE THAT WORKERS MEDICAL RELIEF FUN D IS FOR THE BENEFIT OF CHILDREN OF EMPLOYEES. THEREFORE, THE PROVISION S OF SECTION 40A(9) DO NOT APPLY IN THIS CASE. ACCORDING TO TH E AO, ANY SUM PAID BY THE ASSESSEE TOWARDS SETTING UP OF OR FORMA TION OF OR AS CONTRIBUTION TO ANY FUND AS REQUIRED UNDER ANY LAW FOR THE TIME BEING IN FORCE EXCEPT WHERE SUCH SUM IS COVERED UNDER CLAUSE (IV) 5 ITA NO.1115/PN/2014 AND (V) OF SUB-SECTION 1 OF SECTION 36 IS LIABLE TO BE DISALLO WED U/S.40A(9) OF INCOME-TAX ACT. SINCE THE SAID PAYMENT IS N OT COVERED UNDER ANY OF THE ABOVE PROVISIONS, THE AO HELD THAT THE SAME WAS NOT ALLOWABLE BUSINESS EXPENDITURE AS PER PROVIS IONS OF SECTION 40A(9) OF INCOME-TAX ACT. 12. IN APPEAL THE LD.CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A.Y. 2001-02,2002-03 AND 2005-06 UPHELD THE ACTION OF THE AO AND DECIDED THE ISSUE AGAINST THE ASSESSEE. 13. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 14. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN A .YRS. 2001-02 AND 2002-03. THE TRIBUNAL VIDE ITA NO.251 AND 1123/PN/2006 ORDER DATED 21-08-2009 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 31. IN GROUND NO.3 THE ASSESSEE HAS CHALLENGED THE ACT ION OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.1,58,220/ - BEING CONTRIBUTION TO WORKERS MEDICAL RELIEF FUND U/S.40A(9 ) OF THE ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE CONTRIBUTION TO AF ORESAID GOVERNMENT LABOUR WELFARE FUND IS COVERED U/S.43B OF THE ACT AND NOT U/S.40A(9) OF THE ACT. THE ASSESSING OFFICER DID NO T ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND DISALLOWED THE SAME. ON APPE AL, THE LEARNED CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSI NG OFFICER. 32. HAVING REGARD TO THE RIVAL CONTENTIONS AND PERU SING THE MATERIAL ON RECORD, WE FIND THE ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH OF HYDERAB AD IN THE CASE OF RAASI CEMENT LTD. VS. ITO WHEREIN IT WAS HELD AS UNDER : HERE WAS A CASE WHERE A GENUINE FUND HAD BEEN SET UP WITH A PROPER SCHEME FOR THE BENEFIT OF THE EMPLOYEES OF THE ASSESSEE-COMPANY, THE FUNDS BEING PROVIDED EXCLUSIVELY FO R IT OVER WHICH THE ASSESSEE HAD NO CONTROL IN VIEW OF THE PROVISIONS OF THE TRUST DEED THAT HAD BEEN EXECUTED CONSEQUENTLY FOR PROPER IMPLEMENTATION OF THE SCHEME OF WELFARE MEASURES. APART FROM THE ABOVE, SECTION 40A(9 ) COULD NOT BE MADE APPLICABLE TO A GENUINE TRUST WHIC H WAS CONSTITUTED UNDER A TRUST DEED EXECUTED AND WHICH WAS FORMED FOR THE PURPOSE OF AMELIORATING THE CONDITION S OF WORKMEN WORKING IN AN INDUSTRY AS HEREIN. THE INDUSTR IAL 6 ITA NO.1115/PN/2014 DISPUTES ACT, 1947, ALSO OBLIGES THE EMPLOYER TO COMPLY WITH THE TERMS OF SETTLEMENT ARRIVED AT AND TO DISCHARGE TH E OBLIGATIONS UNDER THE AGREEMENT. 33. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF CO- ORDINATE BENCH OF HYDERABAD WE DELETE THE IMPUGNED DISALLOWAN CE. GROUND NO.3 IS THUS ALLOWED. 15. SINCE THE CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASS ESSEE BY RELYING ON THE ORDERS OF HIS PREDECESSOR IN ASSESSEE S OWN CASE FOR A.Y. 2001-02 AND 2002-03 AND SINCE THE TRIBUNAL HAS D ECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THEREFORE, FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESS EES OWN CASE IN THE EARLIER YEARS AND IN ABSENCE OF ANY CONT RARY MATERIAL BROUGHT TO OUR NOTICE THE DISALLOWANCE MADE BY T HE AO AND UPHELD BY THE CIT(A) IS SET ASIDE. GROUNDS OF APPEAL N O.2.1 TO 2.4 BY THE ASSESSEE ARE ALLOWED. 16. IN GROUNDS OF APPEAL NO.3.1 AND 3.2 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWAN CE OF EDP SERVICE CHARGES TO THE EXTENT OF RS.1,01,86,651/- B Y HOLDING THAT THE ABOVE EXPENDITURE WAS IN THE NATURE OF CAPITAL EXPENDITURE. 17. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS PAID RS.1,01,86,651/- TO M/S. ALFA LAVAL LUND AB, SWEDEN ON ACCOU NT OF COST SHARE ARRANGEMENT FOR SHARING COMMON RESERVES LIKE DATABASE MANAGEMENT, COMMON SOFTWARE ETC., AND CLAIMED T HE SAME AS REVENUE EXPENDITURE REJECTING THE VARIOUS EXP LANATIONS GIVEN BY THE ASSESSEE THE AO TREATED THIS EXPENDITURE AS CAPITAL EXPENDITURE. HE HOWEVER ALLOWED DEPRECIATION @30%. 7 ITA NO.1115/PN/2014 18. IN APPEAL THE LD.CIT(A) FOLLOWING HIS ORDER OF HIS PREDECESSOR FOR A.Y. 2003-04 AND 2004-05 UPHELD THE ACT ION OF THE AO. 19. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 20. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A .Y. 2006- 07. THE TRIBUNAL VIDE ORDER DATED 21-03-2016 HAS RESTO RED THE ISSUE TO THE FILE OF THE AO BY OBSERVING AS UNDER : 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD BOO KED AN EXPENDITURE TO THE TUNE OF RS.76,05,931/- AS EDP SER VICE CHARGES PAID TO ALFA LAVAL LUND, SWEDEN. THE SAID CHARGES WER E PAID TO THE PRINCIPAL COMPANY FOR PROVIDING VARIOUS SERVICES RELAT ING TO INFORMATION TECHNOLOGY TO ALL THE GROUP COMPANIES IN ALFA LAVAL GROUP. THE SHARE WAS ALLOCATED BY THE CENTRAL IT GROU P ON ACCOUNT OF INFORMATION TECHNOLOGY RELATED COST INCURRED BY THE GROUP AND ALSO ON ACCOUNT OF MAINTENANCE OF CENTRAL MAIL SERVERS, MA INTENANCE OF ALFA LAVAL INTERNET AND ALLOCATION COST INCURRED FOR EVALUATING VARIOUS IT SOLUTION TRIALS, IT INITIATES, ETC. THE ASSESSING OFF ICER HAD IN THE DRAFT ASSESSMENT ORDER PROPOSED DISALLOWANCE SINCE AS PER T HE DETAILS, HE WAS OF THE VIEW THAT THE SAME WAS FOR ACQUI SITION AND USE OF SOFTWARE. THE ASSESSING OFFICER IN THE DRAFT ASSESSMENT O RDER PROPOSED TO ALLOW DEPRECIATION @ 30%. HOWEVER, THE D RP HELD THAT THE SAID EXPENDITURE HAD NOT RESULTED IN OWNING OR AC QUIRING OF ANY TANGIBLE OR INTANGIBLE ASSETS, THEN HELD THAT THE SAME EXPENDITURE IS NOT TO BE ALLOWED IN THE HANDS OF ASSESSEE AND THE DEPRE CIATION PROPOSED TO BE ALLOWED IN THE DRAFT ASSESSMENT ORDER WAS DIRECTED TO BE WITHDRAWN. THE ASSESSEE HAS FILED AN APPEAL BEFORE US AGAINST THE SAID DIRECTIONS, WHICH HAVE BEEN INCORPORATED BY THE ASSESSING OFFICER. 20. WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE RE LATING TO ASSESSMENT YEAR 2008-09 IN ITA NO.85/PN/2013, VIDE ORDE R DATED 30.08.2013 WAS ABREAST OF SIMILAR ISSUE OF PAYMENT OF ED P SERVICE CHARGES AND THE ISSUE WAS SENT BACK TO THE ASSESSING OFFICE R TO LOOK INTO THE NATURE OF EXPENDITURE AND WHETHER THE SAME WAS MADE FOR USAGE OF SERVICES OR FOR ACQUISITION OF ANY ASSETS OF ENDU RING NATURE. FOLLOWING THE SAID RATIO, WE REMIT THIS ISSUE ALSO BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL DECIDE WHETHER THE EXPENDIT URE HAS BEEN INCURRED FOR USAGE OF SERVICES PROVIDED BY CENTRA L IT GROUP AND NOT FOR ACQUISITION OF ANY ASSET OF ENDURING NATURE AN D AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, DECI DE THE SAME IN ACCORDANCE WITH LAW IN LINE WITH THE ORDER OF TRIBU NAL IN ASSESSMENT YEAR 2008-09. THE GROUND OF APPEAL NO.3 RAISED BY TH E ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NO.1115/PN/2014 21. FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN C ASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WE RESTORE THE ISS UE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE A FRESH IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL FOR A.Y. 2006-07 AN D IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 22. GROUND OF APPEAL NO.4 BY THE ASSESSEE READS AS UNDER : 4. THE LD.CIT(A) ERRED IN CONFIRMING AN ADHOC DISAL LOWANCE OF RS.1,67,916/- (BEING 10% OF WORKMAN & STAFF WELFARE EXPENSES, SALES PROMOTION EXPENSES, ADVERTISEMENT EXPENSES AND TRAV ELLING EXPENSES IN ALL AGGREGATING TO RS.16,79,16,202/-) TO COVER THE LEAKAGE OF REVENUE. 23. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y . 2005- 06. WE FIND THE TRIBUNAL VIDE ITA NO.2300/PN/2012 AND ITA NO.2442/PN/2012 ORDER DATED 18-03-2015 DELETED THE DISALLOWANCE BY OBSERVING AS UNDER : 18. IT IS QUITE EVIDENT THAT THE DISALLOWANCE IN QUE STION IS MADE IN AN ADHOC MANNER AND IS BASED ON MERE SURMISES AND CONJE CTURES. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DI RECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.3,17,240/ -. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 24. SINCE IN THE INSTANT CASE ALSO THE DISALLOWANCE WAS MAD E IN AN ADHOC MANNER, THEREFORE, FOLLOWING THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06, THE DISALLOWANCE MADE BY THE AO AND UPHELD BY THE CIT(A) IS DELETED. GROUND RAISE D BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 9 ITA NO.1115/PN/2014 25. IN THE RESULT, GROUNDS OF APPEAL NO. 3.1 AND 3.2 BY TH E ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE REMAIN ING GROUNDS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-04-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 07 TH APRIL 2016 ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) , / THE CIT(A)-V, PUNE 4. % / THE CIT-V, PUNE 5 . 6. ( ++,, ,, / DR, ITAT, A PUNE; 1 / GUARD FILE. / BY ORDER , ( + //TRUE COPY // ( + //TRUE COPY// 34 + , / SR. PRIVATE SECRETARY ,, / ITAT, PUNE